Games Workshop (GAW) Initiating Coverage
We are long this high ROIC compounder rapidly expanding its cult fan base
We have initiated a position in $GAW.LSE, and as a standard disclaimer are noting that nothing written below represents investment advice. Please consult your fiduciary prior to making any investment decisions.
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We recommend a buy position in Games Workshop Group PLC (GAW) with a price target of ~€190 per share, implying ~30% upside from its current ~£145 level. GAW is a best-in-class compounder within its niche. It is the undisputed leader in the world of tabletop wargaming and miniature figurines, with a dedicated global fanbase. It has built an exceptional business model that thrives on its highly loyal customer base, valuable intellectual property (IP), and premium pricing strategy.
The company is often regarded as a “monopoly” in the tabletop gaming space, owning iconic franchises like Warhammer 40,000 and Age of Sigmar. GAW’s ability to monetize its IP extends far beyond physical products, encompassing digital content, video games, and partnerships with streaming platforms.
Despite their niche market, GAW has demonstrated impressive growth over the past decade, with their revenue and profits consistently growing at high margins thanks to its vertically integrated production model and razor-sharp focus on fan engagement.
Operating margins are among the highest in the retail and entertainment sectors, regularly nearing 40%. GAW’s recent partnerships, such as the highly anticipated Warhammer series with Amazon Studios, signal that the company is doubling down on leveraging its IP to attract new audiences and sustain its growth trajectory. Catalysts like the 2026 Amazon Warhammer series and a 20%-30% capacity boost from new factories will propel brand visibility and earnings, driving a re-rating.
The Business
GAW is a British company known for its popular miniature war games like Warhammer Fantasy (now Warhammer: Age of Sigmar) and Warhammer 40,000. Founded in 1975 and based in Nottingham, England, it is a leader in the hobbyist gaming world. In addition to the Warhammer series, GAW also creates games like Blood Bowl, Necromunda, and Kill Team, as well as licensed miniature ranges for The Lord of the Rings and The Hobbit.
The company makes detailed miniatures for customers to paint and use in tabletop games. Their strong community of players and collectors has helped them build a sizable moat, with unique stories and worlds that fans love.
GAW generates ~56% of its core revenue from international markets, and it operates 553 stores worldwide, in addition to selling through ~7,500 independent retailers. The company is vertically integrated and controls every part of its business process, from design and manufacturing to sales, ensuring a high-quality experience for customers.
The largest portion of their revenue comes from the sale of miniatures, games, and related products. In addition to miniatures, GAW sells rulebooks, expansion packs, paints, and hobbyist tools. These products are sold through their own retail stores, independent retailers, and online platforms. The strong global community of hobbyists ensures a steady stream of repeat customers, making product sales the company's core revenue source.
Licensing also contributes to GAW's revenue, though it is secondary. According to their most recent annual report, core revenue made up 94% of their revenue and licensing made up the other 6%.
GAW's high margins directly showcase their pricing power. Their customers are loyal and willing to pay premium prices for the Warhammer experience, whether for collectibles, games, or being part of a fervent community. They have cultivated a devoted fan base, turning their products into aspirational items, very similar to the most premium luxury brands.